The number of people placed into permanent job roles across the UK fell in May and at a quicker pace than in April, according to the Report on Jobs from IHS Markit/REC (Recruitment and Employment Confederation) and professional services firm KPMG. At the same time, temp billings expanded marginally, with growth hitting a 73-month low.

The Report on Jobs cited many reports from recruitment consultancies and employers across the UK that hiring activity was dampened by uncertainty. The Brexit-related uncertainty had reportedly led some firms to postpone hiring decisions, while some panellists also indicated that overall demand for staff had softened from early-2019.

James Stewart, Vice Chair at KPMG, said, “Brexit uncertainty continues to dampen the jobs market as companies kept their recruitment decisions on hold in May. Permanent staff appointments fell at a slightly faster pace than in April, while subdued confidence ensured that growth in temporary billings hit a six-year low.”

Meanwhile, recruitment firms signalled a slightly stronger rise in overall vacancies during May, but growth remained close to April's 80-month low. Growth of demand for temporary workers continued to outpace that for permanent staff.  Vacancy growth also continued to be largely driven by the private sector.

Demand for permanent staff remained strongest in IT & Computing in May, closely followed by Engineering. The only two monitored sectors to register lower permanent job vacancies were Construction and Retail.

The Nursing/Medical/Care sector saw the sharpest increase in temporary staff demand during May.

“Of increasing concern is that (Brexit) uncertainty is feeding through to weaker growth in job vacancies, while the supply of candidates fell sharply as people are becoming more risk averse with regards to switching roles,” Stewart said. “Relatively muted trends for permanent staff vacancies were seen across the board, with retail, construction and executive/professional hit particularly badly.”

The Report on Jobs also found that the overall availability of candidates across the UK continued to decline sharply in May. Notably, the rate of reduction quickened to the steepest since January. Ongoing Brexit-related uncertainty and generally tight labour market conditions were cited as key factors weighing on candidate availability during May. Furthermore, both permanent and temporary staff supply declined at faster rates than in April.

The report also showed that salaries awarded to permanent starters continued to grow sharply in May, but the rate of inflation was the least marked for just over two years. In contrast, temp wages increased at the quickest pace for six months. Panellists commonly stated that competition for scarce workers continued to place upward pressure on pay.

“We expect the labour market to remain in stalemate over the summer as the contest for a new Prime Minister kicks off. Companies are unlikely to make any dramatic investment decisions until a new leader is in place and have more insight on the future direction of Brexit,” Stewart said.